Jenner & Block: U.S. Court of Appeals Mandates Decision on Act of War Defense to WTC CERCLA Claims

By Gabrielle Sigel, Partner, Jenner & Block

The U.S. Court of Appeals for the Second Circuit has issued a mandate to the U.S. District Court for the Southern District of New York, requiring the lower court to determine whether contamination from the collapse of the World Trade Center buildings are subject to the "act of war" affirmative defense from liability under the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601, et seq. ("CERCLA"). In re Sept. 11th Litigation: Cedar & Washington Assoc. LLC v. Port Authority of New York and New Jersey, No. 10-CV-9197 (U.S. Dist. Ct. S.D. N.Y. May 23, 2012).

After September 11, 2001, Cedar & Washington Associates LLC ("C&W") decided to renovate its office building, located near the former site of the World Trade Center ("WTC"). The New York Department of Environmental Conservation informed C&W that it would need to remove "WTC Dust" from its building. WTC Dust is a finely ground substance, including asbestos, lead mercury and benzene, which infiltrated nearby buildings as a result of the September 11 attacks. C&W seeks to recover its remediation costs through a CERCLA claim filed against the owner of the WTC site, lessees of the WTC buildings, and the owners and operators of the two airplanes that were crashed into the WTC.

In response to motions to dismiss filed by the defendants, the U.S. District Court ruled against C&W on two grounds. First, the court found that C&W's 2008 complaint was barred by CERCLA's 6-year statute of limitations for remedial actions when the court found that the on-site construction of remedial action began in 2001, when FEMA constructed scaffolding around the WTC site. Therefore, because C&W did not file its claim within 6 years of that government action, its CERCLA claim was time-barred under42 U.S.C. § 9613(g)(2)B). Second, the district court found that C&W had not alleged either a "release" of hazardous substances or "disposal" of hazardous substances under CERCLA, 42 U.S.C. §§ 9607(a)(1) and (2); thus, it had not alleged a CERCLA claim.

On appeal, the Second Circuit noted that resolving whether C&W's claims can be sustained under CERCLA "may involve thorny questions of statutory interpretation." The appellate court stated that it was "reluctant" to address this issue without first considering whether all of C&W's CERCLA claims should be dismissed under the "act of war" defense. Under CERCLA, 42 U.S.C. § 9607(b)(2), no party can be held liable if the release of hazardous substances was "caused solely by. . . an act of war." For reasons not explained by the appellate court, the district court did not address this issue although all defendants raised the "act of war" clause as an affirmative defense to C&W's complaint.

The appellate court retained jurisdiction of the case, but mandated that the district court receive briefs and reach a decision within 75 days on whether the "act of war" defense precludes all CERCLA claims. The Court of Appeals will then hear an expedited appeal, if any, of the district court's ruling.

Gabrielle Sigel, a partner in Jenner & Block's Environmental Practice, is Co-Chair of her Firm's Climate and Clean Technology Law Practice. Ms. Sigel's national practice focuses primarily on environmental, safety and health litigation and counseling, toxic tort defense, and insurance coverage litigation and counseling. She recently concluded several toxic tort lawsuits concerning a contaminated site located in a residential area.